Ethereum will execute a hard fork this week named “Constantinople.” It is the first major Ethereum update of 2019.
The hard fork will take place at block number 7,080,000, expected on Wednesday 16th January.
So, what is Ethereum Constantinople? What upgrades will it bring? And do you need to do anything with your ethereum funds?
What is Ethereum Constantinople?
In simple terms, the Constantinople lays the technical groundwork for huge scaling plans in the future.
Ethereum has a long roadmap, stretching into 2025, that aims to address congestion problems on the blockchain (the network almost ground to a halt at the end of 2017 when users flooded the system).
The Constantinople upgrade is the first step towards larger scaling ambitions. One independent developer referred to it as a “maintenance and optimization upgrade.” In other words, end-users shouldn’t notice too much difference.
Constantinople, however, is not expected to be a contentious hard fork.
There is relatively strong support from miners across the board. The vast majority are expected to upgrade their nodes, and we won’t see two competing chains.
What upgrades will it bring?
The upgrade will implement five ethereum improvement proposals (EIPs).They are as follows:
EIP 145 – Will result in a 91.4% saving in Ethereum gas costs through more efficient information processing methods. It relates to a process known as Bitwise shifting and requires the introduction of a native operation on the Ethereum Virtual Machine (EVM).
EIP 1052 – Makes it cheaper to process large smart contracts that only require a hash.More specifically, this functionality returns the keccak256 hash of a contract’s bytecode. It improves upon the design of the EXTCODECOPY opcode.
EIP 1283 – This proposal aims to help smart contract developers by reducing gas costs related to changes made to data storage.
EIP 1014 – Introduces some off-chain transaction solutions to improve scaling possibilities.
EIP 1234 – Delays the “difficulty bomb” and reduces the mining reward from 3 ETH down to 2 ETH.
What is the difficulty bomb and why is it controversial?
The most controversial change in the proposal is the decision to delay the Ethereum difficulty bomb and reduce the mining reward.
The difficulty bomb is designed to progressively increase mining difficulty on the network. Eventually, it will become so difficult to mine Ethereum blocks, we will enter an “ice age.”
That process is designed to force miners away from Ethereum’s current “proof of work” system to “proof of stake.” Proof of stake is a more efficient algorithm that doesn’t require the vast computing power of miners.
The difficulty bomb will trigger the gradual shift towards the new algorithm by de-incentivizing miners.
The shift will also reduce the mining reward from 3 ETH to 2 ETH. It’s a somewhat controversial move as it will put economic pressure on the mining community. There’s also an argument that it will shift more power into the hands of large mining pools, which can afford to bear the economic costs in the short term.
Although some miners aren’t happy with the proposal, mining pools have indicated their broad support for the upgrade.
If you hold Ethereum…
… You won’t need to do anything with your funds. The hard fork should execute seamlessly and you’re unlikely to notice any difference or disruption.
It’s time to reassess the idea that bitcoin is a model for redistribution of wealth and equality.
The 1% own 87% of Bitcoin Supply
According to research published in China’s National Business Daily, almost 90% of circulating bitcoin supply is held in just 0.7% of wallets.
The huge concentration of crypto wealth can probably be attributed to cryptocurrency exchanges like Coinbase and Binance. Crypto exchanges hold funds in their wallets on behalf of its users, so that wallet may represent thousands of crypto users.
In terms of monetary value, the 0.7% of wallets control $62 billion in bitcoin (correct on January 7th).
Limited Bitcoin Supply
The research also revealed that 97% of crypto wallets held less than one bitcoin.
I believe gaming will be one of the first major breakthroughs of blockchain technology. We already saw the first hints of a breakout when Cryptokitties took the blockchain world by storm in late 2017. So much so that it nearly brought down the Ethereum blockchain.
The ability to own and trade one-of-a-kind digital items makes blockchain gaming a truly unique proposition. Couple that with virtual reality worlds and secure blockchain technology; it’s a revolution waiting to happen.
But there’s a problem. No blockchain platform is yet powerful enough to support high-quality games and millions of users.
Ethereum is the obvious candidate, but as we saw with Cryptokitties, there are serious issues with scaling. Ethereum ground to a halt when too many users flooded the system. The Ethereum scaling roadmap now extends to 2025 to address these issues.
Zilliqa has the potential to scale significantly faster than Ethereum, and the team is putting gaming at the heart of their mission. I spoke to Xinshu Dong, CEO and co-founder of Zilliqa to find out more. First things first:
What is Zilliqa?
Zilliqa is a blockchain platform similar in focus to Ethereum. It gives developers a platform to build games, decentralized apps (dApps), and projects. The key difference to Ethereum is speed and throughput. Zilliiqa can handle 2,828 transactions per second compared to Ethereum’s 15-30.
In Xinshu’s words, “Zilliqa is an open, high-performance, high-security blockchain platform. We aim to make decentralized blockchains the building block of future applications while tackling the limitations in scalability and security in order to enable real-world usability across a variety of industries.”
Why has progress been slow in blockchain gaming?
There are a handful of innovative blockchain games out there right now. But we’re a long way from seeing anything as ambitious as Fortnite or League of Legends on a blockchain. The main reasons for this, Xinshu explains, is “poor user experience (UX) and a lack of concrete user value-add.”
The issue is also rooted in a lack of technology on which to build blockchain games. “It is difficult for developers to fully address this without a stronger tech stack to enable a better user experience.”
Zilliqa aims to fix these issues by establishing a platform that is friendly for gamers to use and powerful enough for developers to build ambitious games upon.
Improving blockchain gaming UX
The problem for gamers starts with a complicated on-ramp. To play blockchain games, you often need to download a browser extension and load up a wallet with the correct cryptocurrency.
“Gamers are confronted with high barriers to entry,” Xinshu says, “due to a complex setup process, such as getting a wallet and an upfront cost to pay for gas fees. This becomes a deterrent for new gamers in the space.”
The games themselves are often slow and cumbersome due to the low transaction rates on Ethereum.
“Blockchain games are slow and the lack of immediate finality results in users waiting for their transactions to finalize, which can often take a few minutes. When compared to mobile, PC, or console games, this is a poor gaming experience. Zilliqa’s higher transaction throughput and lower gas fee can help to address some of these issues. We’re also exploring features that can help developers design more user-friendly games, such as the ability to offset gas fees to developers rather than to users.”
“Etheremon, a decentralized app built on the Ethereum network, experienced high gas fees and transaction congestion due to scalability issues. This led to poor UX for users and Etheremon was forced to move the in-game battles off the blockchain, demonstrating the structural limitations of existing infrastructure and the need for alternative, innovative solutions.”
Zilliqa’s faster platform provides an instant UX boost for gamers and developers. However, speed, UX, and decentralization is just the first step. For blockchain games to truly take off, Xinshu admits, we need a killer game.
“Games Need to be Fun”
“While some gamers may be attracted to the decentralized manner of buying and selling items within the game, ultimately, the game needs to be fun to attract gamers. If the game is not in high demand, to begin with, the items themselves will have little value.
“As a whole, blockchain gaming needs to be designed from the ground-up to maximize the value-add of blockchain as opposed to copying existing mobile gaming paradigms. Zilliqa is actively looking to partner with game developers who are committed to this, and we strive to provide technical solutions to support them.”
Could Virtual Reality Be The Answer?
One of Zilliqa’s partners in the gaming world is Decentraland; a virtual reality platform that supports games and even virtual real estate. Xinshu tells me more about the potential of virtual reality’s interplay with blockchain.
“VR is one of the areas of gaming that has strong synergies with blockchain. In games where users can create their own items, artwork, and worlds, giving them ownership through the blockchain makes a lot of sense –– for example, Cubego, the new game by the Etheremon team, emphasizes user generated content.
“When looking at the entirety of the virtual world on a blockchain, there’s an immutable record of ownership when a user creates these items and eventually, creations can be traded and monetized safely. Although it’s possible to do all of this in a centralized manner, the decentralized nature of building a virtual world on blockchain can breed a stronger sense of community and ownership across the members of that world.”
Let’s get technical…
So far, we’ve addressed Zilliqa’s commitment to the gaming industry. But how does the technology work behind the scenes?
“Zilliqa uses sharding to attain greater scalability while maintaining high standards of security. Our entire mining network is divided into multiple consensus groups – shards – that are capable of processing transactions in parallel. Our network also allows for on-chain linear scalability – this means that as the network grows and the number of nodes increases, the faster our network runs. Though we are able to attain a higher transaction throughput, this does not occur at the expense of the number of nodes available to process transactions.”
Sharding: Zilliqa’s silver bullet for scaling
Zilliqa’s technical solution to high speeds and lower fees is sharding. Sharding is also being explored by Ethereum’s development team, but Zilliqa will likely be the first blockchain to implement the technology.
In simple terms, sharding partitions the blockchain into smaller “shards” in a bid to relieve congestion. It’s one of many proposed solutions for scaling blockchains. But why did Zilliqa put sharding at the heart of its technology?
“We’ve found that sharding is a viable layer 1 solution that allows us to strike a balance between decentralization, security, and scalability. Security is a priority for us and preserving decentralization ensures that our blockchain is secure through the consensus of public opt-in nodes and offers third-party censorship resistance of transactions. By opting for a layer 1 scaling solution, we’re able to scale securely as the blockchain operates with the full security guarantee provided by itself. Moreover, scaling on layer 1 will allow us to explore more solutions for layer 2 scaling further down the line.
Though we believe that sharding is currently one of the best options to tackle the scalability problem, we intend to continue to innovate beyond that as we develop our platform.”
What’s next for Zilliqa?
Zilliqa’s mainnet is scheduled to go live on 31st January. A successful launch could lure even more dApps and game developers to the platform. As Xinshu explains, gaming is just one industry on the platform’s roadmap.
“In general, Zilliqa wants to enable any DApps that can bring a strong user value-add, realize the true potential of blockchain, and benefit from our high throughput platform. We also want to focus heavily on use cases, specifically in digital advertising through our partnership with Mindshare, and in financial services and insurance.
“A strong user experience with low barriers to entry coupled with a clear, concrete user value-add, will help to make DApps more popular among mainstream audiences.”
Every Friday, we take a light-hearted tour through the best memes, artwork, and oddities from the cryptoverse. After another sudden drop in the market, Carty Sewill explorers a meme that pops up all over trading charts: The Bart Pattern.
If you’re like me, staring at the BitMEX chart at 1:00 am on a Thursday, you probably knew it was coming. A classic setup and typical execution. A big green stick followed by a red one a day or even a few hours later. Some of you know it as a ‘pump and dump,’ but veteran traders know it by its true name “The Bart Pattern.” A meme so literal, named after the top of Bart Simpson’s head, it’s uncanny.
But that’s what happens when everyone’s leveraged and the whales decide to have some fun. Profiting while the rest of us “have a cow, man.” It’s no secret. And, furthermore, it’s no surprise so many in the BitMEX trollbox claim to trade based on ‘Bart Pattern Analysis.’ Longing Inverse Bart patterns and shorting the classic Bart. A sort of meta Technical Analysis if you will.
It’s hard to pin down exactly when the Bart pattern appeared as a Technical Analysis meme in the crypto-sphere but if I was to hazard to guess, its origins lie somewhere deep in the BitMEX trollbox sometime around the end of February 2018. As Bitcoin began to settle under $10K. When the action slowed, the manipulation flowed, and the whales were forced to keep themselves entertained.
Soon, Barts began appearing on 4chan’s /biz/; as with any good crypto-meme. Some decrying latent manipulation while others boasting of their TA prowess in identifying an ‘obvious Bart.’ All with an image of the same lovable, menacing, iconic yellow-faced dude’s hair sitting under the Bitcoin chart. In no time, Bizonacci was making light and posting videos. Even going so far as identifying ‘Marges’ and ‘Lisas’ on the 1m chart.
Today it’s a regular sight and topic of discussion on TradingView. And not without merit. Veteran and newbie traders alike yielded to the power of the Bart pattern. Bears and bulls both living in fear of the instant liquidation of the first and last stick while smart traders set stop losses and call for Bart Simpson to make a cameo.
I’ve even tried to play a few myself. Though, with little success. But like many before me I’ll keep taking my chances and, hopefully, one day call a Bart like a boss.
The Blockchain Association has called on the Securities and Exchange Commission (SEC) to issue more formal guidance on cryptocurrencies. As such, it has outlined a proposed regulatory framework based on previous SEC comments.
Through a post on Medium, The Blockchain Association attempts to codify language issued by the SEC’s Corporation Finance Direction William Hinman. Titled The Hinman Token Standard, Blockchain Association suggests the following guidance:
“A project should meet the standards for decentralization if it more decentralized than the Bitcoin or Ethereum networks on June 14th, 2018.”
The logic behind this statement stems from Hinman’s clarification in June 2018 that bitcoin and ethereum were not considered securities. It follows that if bitcoin and ethereum were sufficiently decentralized on that date, then other projects should aim to meet that standard.
“This uncertainty has a stifling effect on investment”
Further, the SEC chairman Jay Clayton publicly said: “I believe every ICO I’ve seen is a security.”
If cryptocurrencies are considered securities, they will be subject to much more stringent investor regulations. As the Blockchain Association explains, “we must know when tokens qualify as securities and when they do not so innovators know which regulatory regime applies.”
The contradicting statements and lack of clarity is stifling creativity and forcing promising startups out of the US.
“More decentralized than the Bitcoin or Ethereum networks on June 14, 2018”
The Blockchain Association’s proposed guidelines suggest the SEC stick to its conclusion that Bitcoin and Ethereum are sufficiently decentralized. Future policymaking should use this starting point as a foundation, they urge.
The association argues that this is a reasonable starting point with room for a somewhat centralized leadership when required.
Other proposals suggest implementing The Howey Testto cryptocurrency projects. The Howey Test outlines the definition of a security or investment contract and circles around the expectation of profit from a particular promotor or third-party.